ABSTRACT
The Brundtland Commission introduced a critical new dimension into our understanding of economic growth by raising the issue of sustainable development. Universal access to basic water services, for example, is one of the most fundamental conditions for sustainable human progress. To determine whether or not we are living in a sustainable way, information is needed about the ecological, economic and social conditions of the environment in which we live. In particular it is necessary to identify the components of the natural and social system and to defi ne indicators that can provide essential and reliable information about these systems. Genuine Savings (GS), an indicator developed by the World Bank, is a sustainability indicator based on the concepts of national accounts that can provide comprehensive information about the system shaping sustainable development. GS measures the rate of savings of an economy taking into account investment in human capital, depletion of natural capital and damage caused by carbon dioxide emissions. However, the present GS of the World Bank does not cover all aspects of the Earth’s system. In particular it does not consider water as a renewable resource. Water is a normal capital good that provides critical functions for natural and social systems for which no substitutes are available. Not considering water as a critical capital good leads to a loss of prosperity and not considering water in the GS results in a lack of information about the condition of the Earth’s system. The aim of this chapter is to present a two-dimensional indicator that combines the modifi ed Adjusted Genuine Savings (AGS) with the Human Development Index (HDI). The AGS/HDI considers water as the most important renewable resource, an asset to attain sustainability.
